1991 (10) TMI 141 - AT - Central Excise

Tribunal remands case for re-adjudication, stresses natural justice, Supreme Court rulings

HINDUSTAN GAS AND INDUSTRIES LTD. Versus COLLECTOR OF C. EX.

The Tribunal remanded the matters to the Assistant Collector of Central Excise for re-adjudication, emphasizing the need to observe principles of natural ... Valuation Issues Involved:1. Deduction of turnover tax.2. Deduction of interest on receivables.3. Deduction of post-manufacturing expenses.4. Deduction of proportionate cost of cylinders.5. Deduction of distribution expenses.6. Deduction of freight actual.Issue-Wise Detailed Analysis:1. Deduction of Turnover Tax:The assessee claimed a deduction of turnover tax at the rate of 1% of the sale price, but the Superintendent allowed only 0.5%. The Collector of Central Excise (Appeals) upheld this decision, noting that the assessee had paid turnover tax at 50% of the tax payable under Section 6B of the Bengal Finance (Sales Tax) Act, 1941. The Tribunal, referencing the Supreme Court's decision in the case of Union of India v. Bombay Tyres International, supported the deduction of taxes from the sale price to arrive at the assessable value, provided these taxes were proved to have been paid. The Tribunal directed the Assistant Collector to re-adjudicate the matter, allowing necessary deductions in light of the Supreme Court's decisions.2. Deduction of Interest on Receivables:The assessee claimed deductions on account of interest on receivables based on the Supreme Court's judgment in the case of Assistant Collector of Central Excise v. Madras Rubber Factory Ltd. The Tribunal acknowledged that interest on receivables should be excluded from the assessable value, referencing earlier decisions and the Supreme Court's stance that excise duty should only include manufacturing costs and profits, excluding post-manufacturing expenses. The Tribunal remanded the matter to the Assistant Collector for re-adjudication, emphasizing the need to observe principles of natural justice.3. Deduction of Post-Manufacturing Expenses:The assessee claimed a deduction of 29% for post-manufacturing expenses. The Tribunal referenced the Supreme Court's decision in Union of India v. Bombay Tyres International, which clarified that expenses incurred up to the date of delivery, including storage charges, outward handling charges, interest on inventories, and marketing expenses, are not deductible from the assessable value. The Tribunal directed the Assistant Collector to re-adjudicate the matter, allowing deductions as per the Supreme Court's guidelines.4. Deduction of Proportionate Cost of Cylinders:The assessee sought a deduction of Rs. 1 per cubic metre for the cost of durable and returnable cylinders. The Collector (Appeals) supported this deduction, stating that Section 4(4)(d)(i) permits the exclusion of charges for durable and returnable containers. The Tribunal upheld this view, referencing the Supreme Court's decision in Collector of Central Excise v. Indian Oxygen Ltd., which held that rental charges for gas cylinders and interest on deposits for their return are not includible in the assessable value. The matter was remanded to the Assistant Collector for re-adjudication.5. Deduction of Distribution Expenses:The assessee claimed deductions for distribution expenses. The Tribunal referenced the Supreme Court's decision in Union of India v. Bombay Tyres International, which held that expenses incurred up to the date of delivery, including distribution expenses, are not deductible from the assessable value. The Tribunal directed the Assistant Collector to re-adjudicate the matter, allowing necessary deductions as per the Supreme Court's guidelines.6. Deduction of Freight Actual:The assessee claimed deductions for actual freight expenses. The Tribunal referenced the Supreme Court's decision in Union of India v. Bombay Tyres International, which held that the cost of transportation from the factory gate to the place of delivery is deductible from the assessable value. The Tribunal directed the Assistant Collector to re-adjudicate the matter, allowing necessary deductions in light of the Supreme Court's guidelines.Conclusion:The Tribunal remanded the matters to the Assistant Collector of Central Excise for re-adjudication, emphasizing the need to observe principles of natural justice and allow necessary deductions in light of the Supreme Court's decisions in Union of India v. Bombay Tyres International, Union of India and Others v. Bombay Tyres International Pvt. Ltd., and Collector of Central Excise v. Indian Oxygen Ltd. The appeals were disposed of in these terms.